How do you get rid of water damage in plasterboard?

Unless it is a small area, like less than a square foot, you will need to tear out all damaged plasterboard and replace it. Small areas can usually be filled with drywall compound or spackling and sanded or textured as needed.

You can use Kilz on any size stain then paint over it. This is only if when the water dries, the stain is left. If sheetrock is damaged, then you will have to replace it.